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RingCentral (RNG)
NYSE:RNG
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RingCentral
(NYSE:RNG)60Neutral
Positive Factors
Financial Performance
Profitability remains a key focus, with operating margins expanding significantly from previous years, indicating improved financial health.
Product Traction
RingCentral's new products have gained traction within its installed base, which is a positive indicator for future growth.
Negative Factors
Market Growth
The UCaaS market growth has slowed, growing at a mid-single-digit rate, which could affect RingCentral's market expansion.
RingCentral (RNG) vs. S&P 500 (SPY)
Market Cap
$2.49B
Dividend YieldN/A
Average Volume (3M)1.42M
Price to Earnings (P/E)―
Beta (1Y)1.99
Revenue Growth8.99%
EPS Growth63.84%
CountryUS
Employees4,084
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)-0.63
Shares Outstanding80,917,330
10 Day Avg. Volume2,385,745
30 Day Avg. Volume1,421,367
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.06
Price to Cash Flow (P/CF)4.80
P/FCF Ratio10.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$36.75Price Target Upside31.39% Upside
Rating ConsensusHold
Number of Analyst Covering16
RingCentral Business Overview & Revenue Model
Company DescriptionFounded in 1999, California-based RingCentral, Inc. provides software-as-a-service solutions that enable businesses to communicate, collaborate, and connect in North America. The company's products include RingCentral Professional, RingCentral Office, RingCentral Glip, and RingCentral Fax.
How the Company Makes MoneyRingCentral primarily makes money through a subscription-based revenue model. The company's key revenue streams include the sale of its cloud-based unified communications solutions, such as RingCentral Office, which integrates voice, video, and messaging services. Customers pay recurring subscription fees, typically on a monthly or annual basis, for access to these services. RingCentral also generates income from its contact center solutions, collaboration tools, and additional features or services that customers may choose to purchase. Significant partnerships with major telecommunications companies and other strategic alliances also contribute to its earnings by expanding its reach and customer base.
RingCentral Financial Statement Overview
Summary
RingCentral shows robust revenue growth and improving operational efficiency, but struggles with profitability and a highly leveraged balance sheet. The cash flow performance is a positive aspect, demonstrating significant improvement.Income Statement
RingCentral has shown consistent revenue growth, with a notable increase of 8.98% from 2023 to 2024. The gross profit margin is healthy at 70.61% for 2024, indicating strong operational efficiency. However, the company has struggled with profitability, as evidenced by negative net profit margins over several years, with a slight improvement to -2.43% in 2024. The EBIT and EBITDA margins have also shown substantial improvement, indicating progress towards profitability.72
Positive
Balance Sheet
RingCentral's balance sheet reveals high leverage, with negative stockholders' equity and a debt-to-equity ratio that cannot be calculated due to negative equity. The return on equity is also negative, reflecting ongoing losses. However, the company has managed to improve its net debt position, turning it negative, which enhances liquidity. The equity ratio is negative due to negative equity, indicating financial instability.55
Neutral
Cash Flow
The company has seen significant growth in free cash flow, with a remarkable increase of 41.45% from 2023 to 2024. Operating cash flow has improved, leading to better cash flow management. The operating cash flow to net income ratio is positive, suggesting that cash generation is better than accounting profits. However, the free cash flow to net income ratio is negative due to ongoing net losses.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.40B | 2.20B | 1.99B | 1.59B | 1.18B | Gross Profit |
| 1.69B | 1.54B | 1.35B | 1.15B | 860.05M | EBIT |
| 2.67M | -198.81M | -365.79M | -301.79M | -32.78M | EBITDA |
| 240.38M | 133.56M | -649.48M | -166.02M | 58.54M | Net Income Common Stockholders |
| -58.29M | -165.24M | -879.17M | -376.25M | -83.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 242.81M | 222.19M | 269.98M | 267.16M | 639.85M | Total Assets |
| 1.78B | 1.94B | 2.07B | 2.58B | 2.18B | Total Debt |
| 210.99M | 1.59B | 1.68B | 1.43B | 1.45B | Net Debt |
| -31.83M | 1.37B | 1.41B | 1.16B | 805.34M | Total Liabilities |
| 2.13B | 2.45B | 2.56B | 2.04B | 1.87B | Stockholders Equity |
| -351.47M | -502.57M | -482.79M | 538.42M | 312.25M |
| Cash Flow | Free Cash Flow | |||
| 458.28M | 323.92M | 100.87M | -232.80M | -142.88M | Operating Cash Flow |
| 483.28M | 399.66M | 191.31M | 152.15M | -35.19M | Investing Cash Flow |
| -109.36M | -90.45M | -87.21M | -396.83M | -107.69M | Financing Cash Flow |
| -351.08M | -358.02M | -98.22M | -127.05M | 437.59M |
RingCentral Technical Analysis
Negative
27.97
Price Trends
33.56
Negative
35.01
Negative
33.38
Negative
Market Momentum
-1.88
Positive
27.02
Positive
12.50
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RNG, the sentiment is Negative. The current price of 27.97 is below the 20-day moving average (MA) of 31.42, below the 50-day MA of 33.56, and below the 200-day MA of 33.38, indicating a bearish trend. The MACD of -1.88 indicates Positive momentum. The RSI at 27.02 is Positive, neither overbought nor oversold. The STOCH value of 12.50 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RNG.
RingCentral Risk Analysis
RingCentral disclosed 67 risk factors in its most recent earnings report. RingCentral reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RingCentral Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $251.67B | 27.72 | 20.02% | 2.52% | -5.34% | -30.57% | |
73 Outperform | $22.64B | 23.40 | 11.31% | ― | 3.05% | 55.96% | |
68 Neutral | $17.52B | ― | -1.38% | ― | 7.32% | 88.51% | |
66 Neutral | $2.53B | ― | -2.06% | ― | 14.44% | 84.58% | |
60 Neutral | $2.49B | ― | 16.58% | ― | 8.99% | 63.84% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
51 Neutral | $312.11M | ― | -40.78% | ― | -2.23% | 19.48% |
* Technology Sector Average
Performance Comparison
RNG
RingCentral
27.97
-4.32
-13.38%
EGHT
8X8
2.37
-0.39
-14.13%
CSCO
Cisco Systems
63.96
16.30
34.20%
FIVN
Five9
34.34
-22.54
-39.63%
TWLO
Twilio
116.76
58.20
99.39%
ZM
Zoom Video Communications
75.60
9.18
13.82%
RingCentral Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -9.10% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
RingCentral reported strong financial results with record revenue and free cash flow. New products are showing promising growth, and the company is leveraging AI to enhance its offerings. Despite currency headwinds and aggressive pricing strategies impacting the top line, the overall business performance and future outlook remain positive.Highlights
Record Revenue and Free Cash Flow
Q4 total revenue of $615 million and operating margins of 21.3% were both above guidance. Free cash flow hit a quarterly record of $112 million, and for the full year, it rose to $403 million, up 24% versus 2023.
Successful New Product Launches
New products such as RingCX and RingSense are contributing to growth. RingCX now has over 700 customers, and RingSense has over 2,000 customers, with a 65% sequential increase.
Strong AI Product Development
The introduction of RingCentral AI Receptionist (AIR) aims to enhance business efficiencies through AI. This product is integrated into the phone system and acts as a digital employee.
Improved Operating Margins and Stock-Based Compensation
Operating margins improved to 21%, up from 19.1% in 2023. Stock-based compensation as a percentage of revenue declined over 5 percentage points year over year to 14%.
Strong Market Position and Partnerships
RingCentral maintains a 20% market share in UCaaS. Partnerships with major service providers like British Telecom and Vodafone UK are expected to boost product adoption.
Lowlights
Impact of Currency Fluctuations
ARR was affected by approximately a $30 million impact from currency changes, which contributed to slower growth in some areas.
Aggressive Pricing Impacting Top Line
RingCX is priced aggressively, impacting top-line growth even though it is beneficial for bottom-line due to higher margins.
Market Uncertainties
The market continues to face macroeconomic uncertainties and currency headwinds, which could affect business performance.
Company Guidance
In the fourth quarter of 2024, RingCentral reported total revenue of $615 million, exceeding guidance, with operating margins of 21.3%. For the full year, total revenue rose 9% to $2.4 billion, and operating margins improved from 19.1% in 2023 to 21%, marking the first time the company achieved positive GAAP operating profitability for the year. Free cash flow for Q4 reached a record $112 million, contributing to a total of $403 million for 2024, up 24% from the previous year. Stock-based compensation as a percentage of revenue decreased by over 5 percentage points year-over-year to 14%. The company aims to generate $0.5 billion of levered free cash flow in 2025. New products, including RingCX and RingSense, are gaining traction, with over 700 RingCX and 2,000 RingSense customers, contributing significantly to the company's growth. RingCentral is also focusing on AI innovations, exemplified by the launch of RingCentral AI Receptionist (AIR), which is anticipated to enhance customer interactions and efficiency.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.